June 25, 2006

on being in the wine business

Some thoughts on being in the wine business. Some may be truer than others:

1. I never, ever considered getting into this business. It just kindasorta happened. My first job outside of highschool was working in an Edinburgh wine bar [Whigham's], so maybe there’s a connection there, but somehow I doubt it.

2. A common lament of smart people in the wine trade, is the utter lack of smart people in the wine trade.

3. Too many bloody vineyards, not enough bloody retail and distribution outlets. And there’s not a single person in the trade who knows what to do about it.

4. The average Brit drinks four times as much wine as the average American. Yanks like their beer and cocktails more.
5. If you want to sell wine, you have to create brands that have real meaning to people. That’s not quite the same as creating brands that have real meaning to you and your pretentious, "undertones of blackcurrent" asshole friends.

6. Wine retailers must learn to have authority, and use it to have real dialogue with their customers, as opposed to outsourcing it to the wine critics in the media. The Americans understand this better than the Brits. The Americans understand The Kinetic Quality better than the Brits etc.

7. The wine trade is about putting liquid into bottles and convincing somebody else to give you money for it, at a profit. It’s not about retreating to the boonies and doing the midlife-crisis-loser-hippie-downsizing-vineyard thing.

8. The retailers are so utterly flooded with choices that their brains are permanently fried by it.

9. If your wine is not outstanding [for the price point it occupies], you’re dead meat. It's just as hard to sell a $10 bottle of wine as it is to sell a $100 botle of wine. At least if you want to make any money, it is.

10. Seems like both Stormhoek.com and gapingvoid are starting to get read by a lot of people in the wine trade. They rarely leave comments, but prefer to lurk. I guess what we did got their attention.

Hugh
Pretty insightful stuff. I think your analysis of the wine trade would be sharpened if you actually recognized that there were, in fact, two distinct wine trades. Let's call them, for the sake of convenience and brevity, (1) the wine trade selling wine to 'normal' people, and (2) the fine wine trade. Both operate under rather different sets of rules.

Let's ignore (2) because it's not relevant to most people. That's not to say it isn't important. The big issue for (1) is access to market. The big retailers hold the winning hand. They have the customers. The footfall. In a world of over-supply, the people making the stuff tend to get stuffed. The retailers don't have to try harder because they are in the strong negotiating position. So your emboldened point is perhaps unnecessary. Also there's a widespread distrust of retailers by consumers, perhaps for good reason. If you make wine, your best hope is to create a strong brand that the retailers 'need'. Otherwise, you're always negotiating from a position of weakness, because they have what you need - customers.

Hugh I reckon you're on the mark. Further to Jamie G's comments, Jamie I don't think its solely about the retailers, they are only one part of the distribution/sales channel, albeit a big one at the moment until people go huh, why do I pay the middleman to buck up the price when I can go direct to the winery? Thats what I think Hugh is getting at: direct word of mouth relationships with people that create ownership of the brand, which is where podcasting and blogging become so important, people can connect and breathe it in.
For those that came in late, here in Australia, the retail value chain is almost dead because 2 supermarkets control 93% of outlets, and of that, the Fosters juggernaut controls 90% of the wine in those outlets. So other direct channels to customers is a key way that most (read small) Australian wineries will need to get to their customers in the future.